5 Mistakes to Avoid When Buying Homeowners Insurance

When it comes to buying homeowners insurance, it’s easy to get confused by the wide range of options.  Choosing the right coverage will help you avoid paying out-of-pocket in the event of a loss.  So, how can you tell if you made the right decision? 

Key Takeaways

  • Your homeowners insurance should provide adequate coverage.
  • Research different options before making a decision.
  • Cheaper is not always better.
  • Know your policy.

If you’ve never bought a homeowners policy, here are 5 homeowners insurance mistakes you should avoid:  

#1.  Not buying enough homeowners insurance coverage.

Your lender may require you to buy a certain amount of coverage.  However, this is often the minimum coverage and it may not be enough.  If you buy the minimum amount to keep premiums lower you will pay more later.

Think about the financial burden you’d face if your insurance won’t pay to rebuild your home.  Make sure you have replacement cost insurance to avoid the risk of inadequate coverage.

#2.  Not shopping around.

Each insurance company has different rates and coverage.  Make sure to get quotes from several providers before making a decision.  Rushing through this process could mean you’ll have to pay more than you need to.  

#3.  Failing to ask about bundling.

Are you also paying automobile insurance or life insurance?  If so, talk to the insurance company about bundling your coverage.  This tactic can save a significant amount of money on monthly premiums.  Of course, research bundling options with different providers to ensure you get the best deal.

#4.  Making assumptions about what’s covered.

Typically, homeowners insurance covers fire or storm damage, but not flood damage.  You will need to add an endorsement for flood insurance.  Also, don’t assume that all of your valuables are adequately covered.  You may need extra coverage for high-value items such as jewelry, fine art, musical instruments, etc.

#5.  Choosing the wrong homeowners insurance deductible.

Many homeowners set their deductible too low or too high.  Why do they do it?  Mainly to save money.  Low deductibles mean you’ll pay less out of pocket for a loss.  However, this approach also keeps premiums higher.  A high deductible means you’ll pay more out of pocket for a claim, but your monthly or annual premium will be lower.  

You can choose different types of deductibles such as flat deductibles or percentage deductibles: 

  • With a flat deductible, you pay a fixed dollar amount in the event of a covered loss.  For instance, if you file a claim for ,000, and your deductible is ,000, the insurance pays ,000, and you pay ,000.  
  • With a percentage deductible, the amount you pay will be a percentage of the total coverage amount.  For example, you insure your home for $300,000 with a 2% deductible.  In the event of a loss, you’d pay $6,000 (2% of $300,000).

A good way to decide on the right deductible is to consider how much you can reasonably afford in the short term and the long term.  As a precaution, some homeowners set aside money to ensure that they can cover their deductible in the event of a claim.

A Few More Tips for Getting the Right Homeowners Insurance 

Homeowners InsuranceMany first-time homeowners opt for the easy solution going with whatever insurance their realtor or lender recommends.  But, this might not be your best option.  To make the right decision about your insurance coverage, here are a few homeowners insurance tips you might find useful.

  • Check the insurance company’s financial rating.  A good rating by AM Best or Demotech indicates that the company can meet its obligations.
  • Research additional protections based on where your home is located.  You may need to add coverage for high-risk areas such as earthquake zones.
  • Look for discounts.  Some companies offer discounts for things such as security systems, sprinkler systems, automatic water shut-off valves, and leak sensors.  
  • Ask about loss of use coverage.  This coverage helps you pay living expenses if your home is being repaired.  Experts suggest at least 20 percent of the dwelling coverage in loss of use insurance. 
  • Add liability protection.  $100,000 impersonal liability coverage will ensure that you are covered if someone is injured on your property.  

Remember, cheaper isn’t always better.  Don’t fall into the trap of wanting to save a few dollars every month by skimping on your homeowners insurance.  If you’re like most homeowners, coming up with thousands of dollars to cover a loss won’t be easy.  So, do your research, compare, and prepare.

Talk To the Homeowners Insurance Experts at Sandifer Insurance

Are you unsure about buying homeowners insurance without help?  If so, contact Sandifer Insurance Agency.  One of our agents will assess your needs and recommend the best coverage at an affordable rate.  Our team has over 40 years of experience in the insurance field.  We will make sure you avoid any homeowners insurance mistakes. 



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